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President Issues Executive Orders as Negotiations Over Relief Legislation Stall

On Saturday, August 8, 2020, President Trump signed four executive orders extending Coronavirus (COVID-19) pandemic relief provisions to millions of Americans, following the breakdown of negotiations between the White House and Democratic leaders over the next round of pandemic relief legislation on Friday. The four executive actions relate to payroll taxes, student loans, evictions and foreclosures, and unemployment benefits. While there are questions concerning the legality and practicality of these executive actions, for the time being, these provisions should be seen as temporary stopgap measures that hopefully spark renewed negotiations between the Trump Administration and Congressional leaders for new relief legislation.

We have summarized the key provisions of each of the four executive orders below. You can click on the subheadings to read the corresponding executive order as it was written and posted on the White House’s website.

Deferring Payroll Tax Obligations

While the Department of the Treasury has already undertaken historic efforts to alleviate the hardships of our citizens, it is clear that further temporary relief is necessary to support working Americans during these challenging times. To that end, today, the President is directing the Secretary of the Treasury to use his authority to defer certain payroll tax obligations with respect to the American workers most in need.

The Secretary of the Treasury is hereby directed to use his authority pursuant to 26 U.S.C. 7508A to defer the withholding, deposit, and payment of the tax imposed by 26 U.S.C. 3101(a), and so much of the tax imposed by 26 U.S.C. 3201 as is attributable to the rate in effect under 26 U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020, through December 31, 2020, subject to the following conditions:

The deferral shall be made available with respect to any employee the amount of whose wages or compensation, as applicable, payable during any bi-weekly pay period generally is less than $4,000, calculated on a pre-tax basis ($104,000 annually), or the equivalent amount with respect to other pay periods.

Amounts deferred pursuant to the implementation of this memorandum shall be deferred without any penalties, interest, additional amount, or addition to the tax.

The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.

Student Loan Payment Relief

On March 20, 2020, the Trump Administration took action to provide immediate relief to tens of millions of student loan borrowers during the pandemic caused by COVID-19 by both suspending loan payments and temporarily setting interest rates to 0%. The original announcement of this policy specified that it would continue for at least 60 days. In the interim, the CARES Act provided this same student loan payment relief, but that program is scheduled to expire on September 30, 2020.

It is, therefore, appropriate to extend this policy until such time that the economy has stabilized, schools have re-opened, and the crisis brought on by the COVID-19 pandemic has subsided.

In light of the national emergency declared on March 13, 2020, the Secretary of Education shall take action pursuant to applicable law to effectuate appropriate waivers of and modifications to the requirements and conditions of economic hardship deferments described in section 455(f)(2)(D) of the Higher Education Act of 1965, as amended, 20 U.S.C. 1087e(f)(2)(D), and provide such deferments to borrowers as necessary to continue the temporary cessation of payments and the waiver of all interest on student loans held by the Department of Education until December 31, 2020.

All persons who wish to continue making student loan payments shall be allowed to do so, notwithstanding the deferments provided pursuant to subsection (a) of this section.

Assistance to Renters and Homeowners

Prior to passage of the CARES Act, the Secretary of Housing and Urban Development (HUD) implemented a foreclosure and eviction moratorium for all single-family mortgages insured by the Federal Housing Administration. Furthermore, prior to passage of the CARES Act, the Federal Housing Finance Agency (FHFA) announced that it had instructed the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (the Enterprises) to suspend foreclosures for at least 60 days. FHFA has since announced that the Enterprises will extend the foreclosure suspension until at least August 31, 2020.

The CARES Act imposed a temporary moratorium on evictions of certain renters subject to certain conditions. That moratorium has now expired, and there is a significant risk that this will set off an abnormally large wave of evictions.

Accordingly, the Trump Administration, to the extent reasonably necessary to prevent the further spread of COVID-19, will take all lawful measures to prevent residential evictions and foreclosures resulting from financial hardships caused by COVID-19.

The Secretary of Health and Human Services and the Director of CDC shall consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary to prevent the further spread of COVID-19 from one State or possession into any other State or possession.

The Secretary of the Treasury and the Secretary of HUD shall identify any and all available Federal funds to provide temporary financial assistance to renters and homeowners who, as a result of the financial hardships caused by COVID-19, are struggling to meet their monthly rental or mortgage obligations.

The Secretary of HUD shall take action, as appropriate and consistent with applicable law, to promote the ability of renters and homeowners to avoid eviction or foreclosure resulting from financial hardships caused by COVID-19. Such action may include encouraging and providing assistance to public housing authorities, affordable housing owners, landlords, and recipients of Federal grant funds in minimizing evictions and foreclosures.

In consultation with the Secretary of the Treasury, the Director of FHFA shall review all existing authorities and resources that may be used to prevent evictions and foreclosures for renters and homeowners resulting from hardships caused by COVID-19.

Extending Unemployment Assistance

The CARES Act included $150 billion appropriated directly to State, territorial, tribal, and some local governments through the Coronavirus Relief Fund (CRF) to cover costs incurred due to the COVID-19 emergency. As of the latest report from the Treasury Inspector General regarding State expenditures, more than $80 billion of CRF dollars remain available to supplement the billions of dollars States have received in other Federal assistance, such as the $8.8 billion in emergency assistance provided under the Stafford Act (42 U.S.C. 5121 et seq.). In addition, the Department of Homeland Security’s Disaster Relief Fund (DRF) has more than $70 billion in emergency assistance funding available.

The President is directing the Federal Emergency Management Agency (FEMA) to assist in providing benefits from the DRF as follows:

To provide financial assistance for the needs of those who have lost employment as a result of the pandemic, President Trump is directing up to $44 billion from the DRF at the statutorily mandated 75% Federal cost share be made available for lost wages assistance to eligible claimants, to supplement State expenditures in providing these payments. At least $25 billion of total DRF balances will be set aside to support ongoing disaster response and recovery efforts and potential 2020 major disaster costs.

The President is also calling upon the States to use amounts allocated to them out of the CRF, or other State funding, to provide temporary, enhanced financial support to those whose jobs or wages have been adversely affected by COVID-19. These funds, including those currently used to support State unemployment insurance programs, may be applied as the State’s cost share with Federal DRF funds. To ensure that those affected by a loss in wages due to COVID-19 continue to receive supplemental benefits for weeks of unemployment ending no later than December 27, 2020, States should also identify funds to be spent without a Federal match should the total DRF balance deplete to $25 billion

To help meet the needs of the American people during this unprecedented and continuously evolving public health crisis, the Secretary of Homeland Security (Secretary), acting through the FEMA Administrator, is authorized to make available other needs assistance for lost wages, in accordance with section 408(e)(2) of the Stafford Act (42 U.S.C. 5174(e)(2)) (“lost wages assistance”), to the people of a State, including the members of any tribe residing therein, if the Governor requests lost wages assistance and agrees to administer delivery and provide adequate oversight of the program, for a major disaster declared pursuant to section 401 of the Stafford Act (42 U.S.C. 5170) for COVID-19, under the following conditions:

the Governor requests from the FEMA Administrator a grant for lost wages assistance pursuant to 42 U.S.C. 5174(f)(1)(A) and agrees to the cost-sharing requirement of 42 U.S.C. 5174(g)(2); and,
the Governor administers delivery of financial assistance for lost wages in conjunction with the State’s unemployment insurance system.

In exercising this authority, the Secretary, acting through the FEMA Administrator, shall, subject to the limitations above, approve a lost wages assistance program that authorizes the Governor to provide a $400 payment per week, which shall reflect a $300 Federal contribution, to eligible claimants from the week of unemployment ending August 1, 2020.

For purposes of this memorandum, the term “Eligible claimants” means claimants who provide self-certification that the claimant is unemployed or partially unemployed due to disruptions caused by COVID-19 and receive, for the week lost wages assistance is sought, at least $100 per week of any of the following benefits:

Unemployment compensation, including Unemployment Compensation for Federal Employees (UCFE) and Unemployment Compensation for Ex‑Service members (UCX), under section 8501 of title 5, United States Code;
Pandemic Emergency Unemployment Compensation (PEUC), under section 2107 of the CARES Act;
Pandemic Unemployment Assistance (PUA), under section 2102 of the CARES Act;
Extended Benefits (EB), under section 3304 of title 26, United States Code;
Short-Time Compensation (STC), under section 3306(v) of title 26, United States Code;
Trade Readjustment Allowance (TRA), under sections 2291 through 2293 of title 19, United States Code; and
Payments under the Self-Employment Assistant (SEA) program, under section 3306(t) of title 26, United States Code; and

The lost wages assistance program described in this memorandum shall be available for eligible claimants until the balance of the DRF reaches $25 billion or for weeks of unemployment ending not later than December 6, 2020, whichever occurs first, at which time the lost wages assistance program shall terminate.

The lost wages assistance program shall terminate upon enactment of legislation providing, due to the COVID-19 outbreak, supplemental Federal unemployment compensation, or similar compensation, for unemployed or underemployed individuals.

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For additional information on Federal, state and local relief measures, please visit our COVID-19 Resource Center on our website. If you have any questions, please contact your Tronconi Segarra & Associates advisor or a member of our response team at covid19team@tsacpa.com